Boeing to raise 787 jet output, upbeat on 777

The Boeing Company logo is projected on a wall at the "What's Next?" conference in Chicago, Illinois, U.S., October 4, 2016. REUTERS/Jim Young

(Reuters) - Boeing Co (BA.N) will raise production of 787 Dreamliner jets to 14 a month in 2019, Chief Executive Dennis Muilenberg said on Wednesday, reviving plans previously on hold due to a wobble in demand for wide-body jets.

Boeing shares rose as much as 1.20 percent.

The increase in output from 12 a month comes as Boeing also voiced confidence that production rates for its older 777 have stopped falling and signals its faith in rebounding wide-body demand.

“Based on existing backlog, we’re confirming now that we are going to build 14-a-month production rate in 2019,” Muilenberg told a Morgan Stanley conference.

“We expect to add 100 airplanes to the 787 (accounting) block. That will factor in to the financials and is accretive to our margins.”

Muilenberg said Boeing had also just grabbed an order for six 777 aircraft, whose output has been slowing as Boeing prepares to introduce an upgraded model from 2020.

The order, to be announced on Thursday, increases Boeing’s confidence about filling remaining production slots during the transition to the new 777X, he said.

“So I think the production plan we laid in place for the 777 represents the floor and we still have some work to do to fill in the remaining skyline, but we’re closing in on it rapidly.”

Asked about future developments, Muilenberg suggested a decision on whether to launch a new “middle of the market” jet could come within the next year.

“It’s going to driven on closing the business case, so it’s not an imminent decision,” he said.

“But if you think about an airplane that would have to enter service in the 2024-2025 timeframe, we’ll be getting into the front end of that decision process over the next year or so.”

As Boeing expands its reach into services, the proposed mid-market airplane, which industry sources say would carry some 220 to 260 people, will be designed from the outset to support higher-margin aftermarket services.

Muilenberg said Boeing could bring more activities in-house after setting up an Avionics business. That too is meant to support future services revenues, rather than just parts manufacturing.

“There’s a handful of these vertical areas that we want to invest in. We don’t need to be vertical everywhere...but where we need some targeted vertical capability, we’re going to invest to build that out,” Muilenberg said.

Reporting by Tim Hepher in Paris and Rachit Vats in Bengaluru; Editing by Leigh Thomas and Sriraj Kalluvila